Agriculture:

According to a new study released by the Center for Global Development and the Peterson Institute, world agriculture will face serious decline due to global warming if global emissions are not reduced soon. During today's OnPoint, William Cline, the author of the study, "Global Warming and Agriculture: Impact Estimates by Country," explains why he believes agriculture in developing nations will suffer the greatest effects due to global warming. Cline makes international policy recommendations and also explains why he chose to make country-by-country projections in this analysis.

Transcript

Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is William Cline, senior fellow at both the Peterson Institute for International Economics and the Center for Global Development. Bill is also author of "Global Warming in Agriculture; Impact Estimates by Country." Bill, thanks for coming on the show.

William Cline: My pleasure.

Monica Trauzzi: Bill, you've written this book analyzing the impacts of global warming on agriculture and which countries will most be negatively affected. In broad terms, how does this analysis differ from other reports on agriculture and global warming? And why did you set out to write this analysis?

William Cline: The principal difference is, there are two principal differences. This is a systematic methodology with country detail. Now, most estimates will be the particular method used for this country and another method used for another country. This is a very systematic standard analysis for over 100 countries and regions that provides a level of detail that has not been available before. And, in addition, it systematically incorporates two different approaches and models, and I can talk about that, but basically it's sort of technical prop models on the one hand and statistical models on the other. Why did I do this? Well, I think for two reasons. I think that there has been some sort of revisionist literature in recent years that somehow has given the impression that agriculture might not be hurt that much by global warming. It might actually be helped by some warming. I thought that that line of argument needed to be scrutinized. And, secondly, it seemed to me that it would be useful for the developing countries in particular to see what are the stakes for them and individual countries in being able to better develop their own views on international cooperation to do something to avoid global warming.

Monica Trauzzi: So, you paint this picture that basically shows that the developing nations will be essentially the biggest losers here. Why do they stand to lose the most?

William Cline: The more I think about it the more I think it basically boils down to where they're located. The closer you are to the equator the higher the average temperature already, the more that going out to further temperature increase will therefore push you past the levels of tolerance for crops. And the developing countries tend to be located near the equator. Now, you can test this by looking at the difference between China and India. India gets very severely adversely affected in my estimates. China has similar results to the United States. Well, it turns out China is in a similar latitude band as the United States. They're about the same distance from the equator as the United States, so the results are about the same, whereas India is closer to the equator. So, in a nutshell that seemed to be driving much of the results.

Monica Trauzzi: So, not everyone loses out, because China and the U.S. are actually, they might see gains up until the end of this century.

William Cline: My best take on it is that they would basically see neutral effects, because I have them both having plus or minus 7 percent impact, depending on whether you incorporate special benefits of carbon dioxide in the atmosphere for plant productivity. My estimates are probably too optimistic because they don't specifically take account of insect pests, of extreme weather events like droughts and like floods. But they are close to wash, whereas India has a hit, a reduction in agricultural productivity of 30 to 40 percent, Africa, a reduction of about 20 percent, Latin America, a reduction of about 20 percent. So, the bulk of the developing countries are in the losing camp and the bulk of the industrial countries are in the sort of neutral, maybe-some-benefit-for-awhile camp. An exception is Australia, an industrial country, which stands to have major losses.

Monica Trauzzi: So what kind of policy is necessary in order to minimize the impacts of warming on agriculture? There are several meetings scheduled for the remainder of this year, two in September, one in December, to talk about a post-Kyoto strategy. What should be included in that?

William Cline: Well, this goes beyond my book, but it is something I have written elsewhere. My preferred strategy would be a globally agreed levy on carbon, something like $100 per ton of carbon, which would translate to something like $60 per ton of coal. And whether you're in China or whether you're in India or whether you're in the United States, a user of carbon has to pay that fee. The revenue is then collected nationally and used nationally for priority projects, whether it's child education or reducing income taxes in the United States, which some might suggest. So that's what I would see as the right direction to go and, importantly, the developing countries themselves would commit to participate in that same initiative. After all, they can use fiscal revenue for their own purposes.

Monica Trauzzi: Since China and the United States might not lose out all that much on the agricultural front, but they're the world's two largest emitters of CO2, do you think these countries that wield a lot of power internationally might not feel the urgency to pass some sort of policy that would help these developing nations on the agricultural front?

William Cline: I think implicitly we have suffered from that already. I do think that my results do show that there are major dislocations within each of those countries. The Southeast, the Southwest, Texas, in the United States would face very major losses and as people become more aware of this I think that the political pressures to do something about it can be mobilized even if on average the country comes out fairly neutrally, China similarly. I think, interestingly enough, one of the principal implications of this could be a certain difference of interests between China on the one hand and India on the other in where we go globally. And hopefully that could be resolved in a positive way where India exerts some friendly peer pressure on China and they both participate. But Lord knows, for the last several years, certainly with the United States refraining from anything like the Kyoto Protocol, there has been, I think, evidence already of a certain sense of lack of immediacy. But I think the politics in this country is changing and I'm sure you know that better than I.

Monica Trauzzi: You discuss three fundamental issue areas in the book. There's carbon fertilization, irrigation, and induced effects from international trade. Explain what the uncertainty is about carbon fertilization. What is that exactly and how could that impact the future of agriculture?

William Cline: Plant growth is a process of photosynthesis and, as the name implies, you're taking light and combining water with carbon dioxide and the product is a carbohydrate, which is plant. Carbo for the carbon, hydrate for the water. Now, it makes sense that if carbon dioxide is an input into the plant you could get more of the plant if you had more of the input. It turns out that crops like wheat and soybeans and rice will respond to availability of more carbon dioxide. In contrast, corn and some other crops already have sufficient carbon dioxide and they have a different structure. There have been laboratory experiments that suggest you could get something like a 30 percent increase in yield from doubling or more of carbon dioxide. What this book does is very carefully assesses what's a reasonable amount to use for that effect? And at the end of the day I come out with a 15 percent boost by the end of the century. But that's still uncertain and, moreover, I do not make any specific allowance for these other negative affects, like increased insects. So, I also include an estimate with no carbon fertilization and that provides, I think, a fairly reasonable range.

Monica Trauzzi: OK. Agricultural trade, I wanted to touch on that as well, is growing and provides importing countries with a significant amount of food and exporting countries with a significant amount of money essentially. Talk about the issue of international trading.

William Cline: I have a special section on that and I guess at the end of the day I'm reluctant to invoke international trade as the solution to this problem. You know, you could argue, well, suppose India's agricultural potential falls by 40 percent and Africa's falls by 25 percent, they could always make more shoes and ship them to the United States or ship them to Canada and Canada will be happy to sell them wheat. There are problems with that. First of all, it has a certain "let them eat cake" element to it, because we're not talking about neutral distribution. You're talking about the hit to these low-income countries and then they're going to pay more from the high-income countries and everybody is going to be happy. So I'm a little bit reluctant to say that there's a natural solution there. You have a specific problem with Canada and Russia that if they traded out to be the breadbasket of the world, by then they're probably going to be making so much money in the energy exports that their currency isn't going to be very strong. And Africa won't be able to afford their wheat. Plus you devise a trade model that has certain assumptions about responsiveness and certain assumptions about politics. Remember in 1974 the United States put an embargo on soybean exports because we thought soybean prices were getting too high at home. So, do we really want to plan for, toward the end of the century, to rest on the premise that if food production really takes a hit in the poor countries they can count on ample availability to trade? So, I tend to be somewhat more skeptical than some other economists who have worked in this area that trade is the automatic solution to this problem.

Monica Trauzzi: We're almost out of time, I just want to get this last question in. How would improved technologies impact things? Could that help minimize the damage that you're predicting in developing nations?

William Cline: I also have a special chapter on this and I think that the tendency of economists to think that the Green Revolution is going to solve this problem because yields will be so high toward that period with technological change that a negative impact on global warming won't make much of a difference. When I consider the slowdown of the Green Revolution in the last two decades from about 3 percent annual yield decrease/increase to about 1.5 percent annual yield increase, when you consider that it will take about three times as much food to feed the world's population toward the end of the century as we have now, and when you consider that maybe a third of the land could be diverted from food to production of ethanol for biomass for fuel, you've got a fairly tight supply/demand race. And in that context, a 20 percent hit from global warming could be very adverse. So, yes, we will get technical change and we will need technical change, but I do not see it as a panacea.

Monica Trauzzi: All right. We're going to end it right there on that note. Thanks for coming on the show.